China: Going for a Knockout on Manufacturing

Sep 12, 2011, 9:39 am EDT

About a year ago, President Barack Obama toured Solyndra, a top manufacturer of solar photovoltaic (PV) systems. It was a centerpiece of cleantech — and how it would reinvigorate jobs. As a sign of importance of the company, the Department of Energy provided a $535 million loan guarantee.

Unfortunately, it has turned out to be a disaster. This month, Solyndra filed for bankruptcy, shut down its manufacturing facility and terminated about 1,100 employees.

The problem? Well, it looks like China has been even more aggressive with its alternative energy investments. The result has been a substantial drop in solar cell prices. Besides Solyndra, two other major U.S. solar firms have imploded during the past month, which include Evergreen Solar (PINK:ESLRQ) and Intel-backed (NASDAQ:INTC) SpectraWatt. Read 

The REALITY of the American Jobs Act — 7 Key Obama Issues

Sep 8, 2011, 10:17 pm EDT
The REALITY of the American Jobs Act — 7 Key Obama Issues

President Barack Obama spoke before a joint session of Congress on Thursday night to unveil his American Jobs Act. The headline facts: It’s a $447 billion effort that focuses on job creation and tax cuts and will be 100% paid for by yet-to-be-named reductions in spending.

Of course, the devil is in the detail. So here’s my analysis of the key points — and my effort to separate fact from fiction, and realistic expectations from political posturing.

Payroll Tax Cuts: Likely to happen, minimal impact. President Barack Obama pitched a redoubled payroll tax cut that would focus on both workers and businesses alike. The current payroll-tax reduction is set to expire in December, and had reduced Social Security taxes from 6.2% to 4.2%. Obama wants the cut not just sustained, but to go deeper in 2012, pushing the rate down to 3.1%. Employers who were paying the full 6.2% rate would also get a cut this time around, too. House Republican leader Eric Cantor reportedly was won over by cuts for businesses, so the GOP can get behind this part of the bill. Of course, passage and impact are two different questions. The previous payroll cut hasn’t exactly caused an economic boom, so it’s unlikely these tax reductions alone can move the needle or spur hiring. Consider that workers making $50,000 a year would see their take-home pay boosted by $1,550. A small comfort, but not much. Read 

Obama’s Speech Will Likely Be Political Theater

Sep 8, 2011, 11:01 am EDT

When is President Obama’s speech tonight about jobs? Obama will speak to Congress Thursday evening at 7 p.m. EST.

What will President Obama’s speech tonight cover? To hear the television and news media speculations, the president will give both chambers of Congress his $300 billion plan to create jobs. Obama should touch on ideas such as building roads and schools, extend unemployment insurance, cut payroll taxes and help chronically jobless groups like older Americans and veterans.

What changes or improvements will President Obama incite with this speech? Well … probably none. The economy will still be in deep trouble, the debt problem will only get worse and the president’s popularity will continue to suffer. Read 

7 Ugly Truths About Obama’s $787B Stimulus

Aug 31, 2011, 4:55 am EDT
7 Ugly Truths About Obama’s $787B Stimulus

One of the first moves of the Obama administration was a $787 billion government stimulus in early 2009 to prop up an ailing economy. Many conservatives these days are focused on reining in government spending — and this undoubtedly will be a talking point in the days to come as GOP candidates and the president hunker down for Election Day 2012.

Was the stimulus just one more Washington boondoggle — a handout to special interests that wasted taxpayer money when we already are up to our eyeballs in debt? Or was it a crucial intervention in a time of great need that helped prevent a recession from turning into a depression or worse?

The nonpartisan Congressional Budget Office has just come out with its report on the American Reinvestment and Recovery Act (referred to in the document as ARRA in typical beltway affection for acronyms and jargon). And its findings on the real impact of the stimulus package are worth noting: Read 

How Much Gas Does the Federal Reserve Really Have Left?

Aug 29, 2011, 4:21 pm EDT
How Much Gas Does the Federal Reserve Really Have Left?

The good news is the Federal Reserve stands ready to help if the U.S. economy acts worse than expected. The bad news is the U.S. economy needs help.

Thus far, the Fed’s monetary trickery has helped to inflate U.S. stocks and U.S. Treasuries, but not much else. Fed Chairman Ben Bernanke actually went on record to say his private organization’s bond buying program could boost U.S. employment by about 700,000 over the next two years. Is he serious? If creating jobs by purchasing bonds is such a great panacea, why haven’t the 7.2 million pre-recession jobs suddenly returned?  

If we were to choose a theme song for the Federal Reserve, the 1977 hit song “Three Little Birds” by Bob Marley would be it. The lyrics are immensely reassuring, not to mention repetitive. The song’s main chorus says, “Don’t worry ’bout a thing ’cause every little thing gonna be all right.” Unfortunately, everything is not all right. Read 

A Tale of Two Fed Speeches – Will the Bernanke Bounce Last?

Aug 26, 2011, 5:09 pm EDT

Hope is not an investment strategy. Yet, the stock market’s fate seems to be closely tied to Bernanke’s Jackson Hole comments and the hope of QE3.

Bernanke’s 2010 Jackson Hole comments on Friday breathed life into the markets (see chart below). But did his 2011 Jackson Hole pep talk on Friday deliver the needed hope or was it another nail in the coffin?

Below is a thorough analysis of Bernanke’s 2011 speech along with a comparison to the 2010 speech. More importantly, we will discuss what the market thinks the odds of higher prices are. Read 

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